Dutch firms urged to expand to SE Asia

By Bob Mantiri

THE HAGUE (JP): Dutch Minister for Economic Affairs Hans Wijers says Dutch companies must expand their activities to South East Asia, especially Indonesia, which is "a fantastic spot to invest in."

"If you want to grow, to earn money, you must be present in that part of the world. It is the nucleus of economic growth in the world economy in the coming 10 to 15 years," Wijers said in an interview, just one week after his successful trip to Indonesia.

Wijers, regarded by his radical liberal D66 party as its potential political leader in the near future, headed an impressive trade delegation of industrial heavyweights, which traveled to the archipelago in the wake of the historic visit of Queen Beatrix. The queen and her delegation stayed in Indonesia for 11 days beginning on Aug. 21.

The mission, the biggest ever to visit Indonesia, resulted in a number of contracts worth, at least, US$1.5 billion.

During his talks with the Indonesian government, Wijers, for the first time, put to the test the new Dutch foreign policy, which gives priority to economic and trade cooperation, above development aid. Trade, not aid, will be the main theme of Dutch foreign policy in the near future.

To stimulate trade with Indonesia until 2001, the Dutch government has put aside 245 million guilders for, among other things, favorable loans for Indonesian buyers and funds for students who want to study at a Dutch university.

Hans Wijers stressed that the loans have nothing to do with development aid, but that it comes from a special fund which has been created specially for trade stimulating purposes.

Until 1991 the Dutch government played a substantial role in the development of Indonesia through the Inter-Governmental Group on Indonesia (IGGI), a consortium of donor countries and organizations which partly financed Indonesia's development programs, which was chaired by the Netherlands. President Soeharto, considering that the Dutch had been using aid as a tool for political intimidation, ordered the dismantling of IGGI that year and rejected any development aid from the Netherlands.

New phase

Wijers believes that the incident now belongs to the past, after the historic Indonesian visit of the Queen and the trade mission.

"A new phase has been entered in the relations between our two countries," said Wijers. "During talks with the Indonesian government, there was a consistent pattern to forget the past and to build a new relationship on the basis of equality and mutual respect."

He regarded it as "a privilege" that during the visit he had meetings with at least nine ministers.

In the discussions with the ministers, both parties pointed to their assets which could be of mutual benefit -- Indonesia as a stepping stone for Dutch business to get access to the South East Asian market and the Netherlands as the gateway for Indonesian products to Europe.

"If no disruption occurs in South East Asia, that region will experience an economic growth of at least 15 percent per annum. Considering the fact that it is not in the line of our expectations that the economy in Europe will see such a growth, it is just logical that European entrepreneurs, including the Dutch, will invest their money and export their products to that part of the world," he said.

It is also a matter of survival for multinationals like Shell, Unilever, Philips, ABN/AMRO and ING Group to be present and to profile themselves in that part of the world. These companies are thinking in terms of "world positions".

"You may wonder why go East and not just focus your attention on the neighboring markets in Europe?" Wijers said.

"In some areas it is, even for the European firms, very difficult to penetrate the market of another European country. Look at the banking sector, there is no chance for Dutch banks to get access to the German market. Those banks have more opportunities in Indonesia and other ASEAN countries, than in the market just around the corner," he said.

The Association of Southeast Asian Nations (ASEAN) groups Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

The economic climate in Europe, with its high wages, expensive health and insurance provisions and hard-to-please trade unions have forced many companies to move productions to low-wage countries. This is a development, which in the opinion of Wijers, cannot be stopped.

Aircraft

Minister Wijers would not exclude the possibility that ailing Dutch aircraft manufacturer Fokker and its mother company Dasa from Germany, would move some of its activities to Indonesia, or other countries in Southeast Asia.

According to Wijers the pattern of thinking among European aircraft manufacturers is to look for joint venture partners in that part of the world with whom they can build new airplanes.

To develop a new airplane would cost at least US$3 billion. There is no European aircraft maker who could afford to spend such a huge amount of money.

So, they have to look for other opportunities and at this moment you can find it in Southeast Asia, especially in Indonesia, which is a "giant market" because airplanes are necessary to connect its islands.

"Indonesia has skilled people who are able to construct parts of airplanes independently. It is logical that Fokker and Dasa would try to move part of their production activities to that country," he said.

Wijers is not enthusiastic about the new European Union's (EU) strategy towards Asia. One of the objectives of the EU is to coordinate all the activities of all its 15 members in an effort to penetrate the Asian market.

A World Bank report marks the rapid economic growth in the wide parts of Asia as a region of enormous potential for the 21st century -- which also changes the world balance of economic power.

By the year 2000, between one quarter and one third of the world's gross national product will be produced in Asia. At that time, the disposable incomes of more than 400 million Asian citizens will be as high as, or higher than, that of their European counterparts.

"Among the 15 EU members there is strong competition to conquer markets in Asia," he said.